Friday, March 29, 2024 | Ramadan 18, 1445 H
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EDITOR IN CHIEF- ABDULLAH BIN SALIM AL SHUEILI

Bliss turns into burden

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If marriages are made in heaven, as the idiom suggests, it certainly does not feel that way for a number of young Omanis — men in particular — who, having tied the proverbial knot, now find themselves in something of a noose — of a debt-related nature.


A number of newly married youngsters, contacted by the Observer, spoke about financial difficulties being the bane of their lives as young couples. Typically hailing from families of modest economic means, these salaried men with stable jobs in the government and private sectors have had to obtain a hefty personal loan from their local banks to finance their nuptials and wedding parties, as well as come up with the ‘mahr’ — the bride price. Lavish gifts, which are the mainstay of modern weddings, added to their cost burden.


Now, less than a year or two into married life, some of these young Omanis lament that their financial burdens feel like millstones around their necks. “The cost of weddings not only sets you back financially, but if you have to run up a large debt in the process, it has the potential to scuttle your ambitions to, for example, buy your own home, begin a family, and provide for a better lifestyle for your spouse and kids,” said a Saham-based Omani matchmaker, who did not wish to be named.


“The burden can be particularly heavy for the groom who, custom dictates, will have to provide the dowry, rings, necklace and necklace for the bride, and all of the gifts. Together with the preparations that must be made for the engagement, it can add up to a pretty hefty price tag,” the matchmaker pointed out.


Take the case of Suhail al Badi, a government employee, whose story as a newly married yet debt-ridden husband, was narrated to the Observer by his grandfather. “When Suhail decided to get hitched, his maximum take-home salary was RO 500. He had no choice but to take a loan from the bank to pay for his wedding expenses. I did advise him against the loan, knowing fully well that it would hurt him later. But he went ahead, took the loan, and enjoyed married life for a while.


But it’s a nightmare now for Suhail. With half of his monthly earnings deducted towards his loan, he can barely cover his family’s expenses for a month, leave alone meet his wife’s aspirations for a better lifestyle. We are worried about the impact of these financial tensions on his personal life and health,” bemoaned the grandfather.


But, hearteningly, other young Omanis are learning to avoid this debt trap. ‘O A’, a newly married Omani, said he began saving money for his wedding expenses in order to spare himself and his future bride the turmoil that typically await young couples saddled with debt.


“I was determined not to take a loan to fund my wedding costs, having seen examples of how indebtedness has hurt family members and friends. So I decided to create a fund of about RO 10,000, which is the average cost of a wedding, and began putting away money into this fund. Five years later, it grew to about RO 12,000, which was enough to cover my wedding expenses. My wife and I are glad we didn’t have to turn to a bank for a loan, and suffer the consequences later.”


O A’s advice to friends: “Borrowing money for repayment after marriage can potentially rob couples of the happiness they expect and deserve. It’s easier to borrow, but difficult once you are married and have expenses to meet.”


According to the Central Bank of Oman (CBO), household indebtedness remains high in the Sultanate relative to trends in the developed world, and thus needs to be carefully monitored to stave off potential risks to nation’s financial stability. Household debt is typically defined as the amount of money owed by all adults in the household to financial institutions. It includes personal loans, consumer debt and housing mortgages.


In the Sultanate, household debt averages about 22 months of an individual’s net salary when it comes to personal loans, rising to 45 months for housing loans. “This level of indebtedness is considered high when compared to that in the Organisation of Economic Cooperation and Development (OECD),” the apex bank said in its 2017 Financial Stability Report.


At present, overall household credit risk indicators remain at low levels and household debt as a percentage of GDP is low. Moreover, the prudential regulations on lending to households are expected to keep the risks in this sector at manageable levels, the CBO report noted.


According to the Central Bank, lending to individual consumers “surpasses” all other sectors. “This kind of household indebtedness is characteristic of a resource dependent economy where the hydrocarbon sector forms a large part of the GDP and imported goods form a big share of domestic consumption.”


“However, lending to households is a sensitive territory as elevated levels of household indebtedness may have implications for financial stability because of its potential to exacerbate the cyclical downturns. Therefore, a close watch on this sector is warranted,” the report stressed.


In 2016, personal loans grew 7.7 per cent to top RO 7.9 billion, accounting for 40.1 per cent of total credit of RO 19.9 billion advanced by commercial banks in the Sultanate. Within the personal loan segment, residential housing loans accounted for 9.8 per cent of the banks’ total credit outstanding.


Hammam Al Badi


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